An organization has to make strategic and operational decisions. Where
and by whom should these decisions be made? And: how should the organization
structure be adapted? Centralization and Decentralization are two opposite
ways to transfer decision-making power and to change the organizational structure
of organizations accordingly.
Centralization:
Definition: The process of transferring and assigning decision-making
authority to higher levels of an organizational hierarchy.
In a centralized organization, the decision-making has been moved to
higher levels or tiers of the organization, such as a head office, or a corporate
center.
Knowledge, information and ideas are concentrated at the top, and decisions
are cascaded down the organization.
The span of control of top managers is relatively broad, and there are
relatively many tiers in the organization. Compare:
Fayol.
Decentralization:
Definition: The process of transferring and assigning decision-making
authority to lower levels of an organizational hierarchy.
In a decentralized organization, the decision-making has been moved
to lower levels or tiers of the organization, such as divisions, branches,
departments or subsidiaries.
Knowledge, information and ideas are flowing from the bottom to the
top of the organization.
The span of control of top managers is relatively small, and there are
relatively few tiers in the organization, because there is more autonomy
in the lower ranks.
Three Forms of decentralization
Deconcentration. The weakest form of decentralization. Decision
making authority is redistributed to lower or regional levels of the same
central organization.
Delegation. A more extensive form of decentralization. Through
delegation the responsibility for decision-making is transferred to semi-autonomous
organizations not wholly controlled by the central organization, but ultimately
accountable to it.
Devolution. A third type of decentralization is devolution. The
authority for decision-making is transferred completely to autonomous organizational
units.
Strengths of Centralization. Characteristics
Philosophy / emphasis on: top-down control,
leadership, vision, strategy.
Forum discussions about Centralization and Decentralization. Below you can ask a question about this topic, share your experiences, report a new development, or explain something.
Benefits of Decentralization. Advantages
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2. Quick decision making, no long processes
3. Local problems get local solutions.
4. Greater participation by the average worker....
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To involve each individual means empoweri...
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Organizational Structure, Departmentalization, Centralization, Decentralization Good presentation on Organizational Design.
Author: Michael Crandall.
First of all the concept of “organizations” is e...
Centralization and Decentralization Download and edit this 12manage PowerPoint graphic for limited personal, educational and business use.
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